Adam Smith Claimed That an Efficient Allocation of Resources Was

question 47

Multiple Choice

Adam Smith claimed that an efficient allocation of resources was the by-product of

• A) random error.
• B) selfish interests of sellers pursuing profit.
• C) well-intentioned government regulation.
• D) selfish interests of buyers pursuing pleasure.
• E) the involvement of self-interested sellers seeking profits with self-interested buyers seeking pleasure.

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Definitions:

Service Department Expenses

Costs associated with departments that support the production or operation of a company but do not directly produce goods or services, such as maintenance and human resources.

DuPont Formula

A formula that breaks down Return on Equity into three components: operating efficiency, asset use efficiency, and financial leverage.

Profit Margin

A financial ratio indicating the percentage of revenue that exceeds the costs of goods sold, reflecting the efficiency of a company in generating profit.

Invested Assets

Resources such as securities and properties that an individual or company has allocated funds towards with the expectation of generating income or profit.